Gross written premiums (GWP) measure the premium volume an insurer writes before subtracting premiums ceded to reinsurers. For property and casualty insurers, GWP is a useful top-line indicator of underwriting volume, but it is not the same as revenue earned during the period.
At a high level:
Gross written premiums = premium volume written before ceded reinsurance
The word written matters. Premium can be written when a policy is bound even though the insurer earns that premium over the coverage period.
Why investors track gross written premiums
GWP can help investors evaluate:
- pricing and rate changes;
- new business and renewal activity;
- exposure growth or contraction;
- changes in product or geographic mix; and
- the scale of business placed before reinsurance.
Rapid GWP growth can reflect healthy pricing and demand, but it can also reflect looser underwriting, acquisition activity, inflation in insured values, or entry into riskier lines.
Gross versus net written premiums
Net Written Premiums subtract premiums ceded to reinsurers from gross written premiums and may include assumed reinsurance depending on the issuer's presentation.
If an insurer writes $1.2 billion of gross premiums and cedes $200 million to reinsurers, a simplified net-written figure is:
$1.2b - $0.2b = $1.0b
The $200 million difference does not mean the reinsurance was economically unfavorable. Ceding premium can reduce retained catastrophe exposure, earnings volatility, capital needs, or concentration risk.
Written premiums are not earned premiums
Gross written premiums are not the same as Earned Premiums.
Suppose an insurer writes a one-year policy for $1,200 on October 1. The full $1,200 may enter written-premium measures when the policy is written, but only the portion associated with coverage provided through year-end is earned in that calendar year.
This timing difference is why strong written-premium growth can lead earned-premium growth rather than appear immediately in the income statement.
Investor interpretation
When GWP changes materially, ask whether the driver is:
- price;
- exposure growth;
- new business;
- retention;
- acquisitions or disposals;
- changes in reinsurance structure; or
- business mix.
GWP alone says little about underwriting profitability. Pair it with Loss Ratio, Insurance Expense Ratio, and Combined Ratio.
Sources
Continue Research
Continue from the concept into the Grizzly Bulls research surface that best matches the next question. These links are research continuations, not recommendations or required steps.
Continue company research
Use broader company research rather than treating premium growth alone as an underwriting conclusion.
Explore more topics in the Financial Research Encyclopedia.